The regulation of Foxp3 transcription is a multifaceted process that probably reflects the necessity of the immune system to fine-tune regulatory T cell function under a vast variety of circumstances. In the present study we focused on regulation of Foxp3 transcription occurring in relation to Tregs induced in the peripheral lymphoid system under the influence of TGF-beta. The data gathered in these studies suggest that regulation of Foxp3 transcription and regulatory T cell development in the peripheral lymphoid tissues is best understood as a two stage process consisting of an initial stage in which Foxp3 transcription was initiated by T cell receptor stimulation and TGF-beta signaling and a second stage in which this initial transcription was either enhanced by retinoic acid (RA) or inhibited by pro-inflammatory cytokines. The molecular mechanisms underlying retinoic acid (RA) augmentation of TCR/TGF-beta-induced Foxp3 transcription and inhibition of the latter by cytokines such as IL-27 are here shown to be related processes in that they both involve modifications of baseline (TGF-beta-induced) pSmad3 binding to a conserved enhancer region (enhancer I). RA augmentation involves the binding of RAR/RXR to a dominant site in enhancer I and a subordinate site in the promoter. This leads to increased histone acetylation in the region of the Smad3 binding site and increased binding of pSmad3. Cytokine (IL-27) inhibition involves binding of pStat3 to a gene silencer in a second conserved enhancer region (enhancer II) downstream from enhancer 1;this leads to almost complete loss of pSmad3 binding to enhancer I. Thus, control of accessibility and binding of pSmad3 provides a common framework for positive and negative regulation of TGF-beta-induced Foxp3 transcription.